In an autonomous finance function, processes and activities are partly governed and majority operated by self-learning software agents that optimize front-, middle- and back-office operations.
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An autonomous finance function isn’t just automated; it’s capable of delivering augmented real-time and predictive insights, effortless compliance and greater flexibility in financial strategy.
But it relies on self-learning software agents and CFOs need a robust technology roadmap and a new mindset to effect this transformation.
The value of data has never been more clear. Today’s organizations require more flexible means to manage and analyze their data to produce innovative and intuitive insights at or near real time.
Finance teams often struggle to create valuable reports and analyses because of a misalignment between finance’s approach and the business’s needs. Piecemeal investments in finance data and analytics have contributed to fragmentation, where data, tools and expertise exist in silos across the organization. Common indicators of fragmentation include:
Data experts and finance analysts speaking “different languages”
New data being gathered without finance staff being made aware of its existence
Best practices for using analytics tools failing to permeate across the organization
Within an autonomous finance function, finance delivers valuable insights to decision makers, finds innovative ways to use analytic resources and connects business problems to the data to help inform better decisions.
Blockchain is a fundamental competency in which CFOs must be fluent by 2025.
While blockchain implementation may not be a priority for CFOs currently, it is a critical component to the future of business and the finance function. Especially as CFOs face unprecedented economic headwinds, implementing blockchain is key to driving better, faster and smarter decision making to meet the demands the business faces now and in the future:
By 2023, 50% of large finance organizations will use AI to create short-term financial forecasts.
AI promises to deliver new insights and automate finance decision making, but the reality of applying the technology is a struggle. Finance leaders don’t know how to identify the processes that will benefit the most from AI, leaving AI ambitions shelved in favor of other priorities and exposed to technical obsolescence as competitors gain traction.
It’s critical to create a culture that embraces and trusts AI. CFOs must actively participate in strategic decisions about when, where and how much AI to use throughout the organization, rather than just treating it as another technology in the stack.
4 key actions to drive AI success:
Leading AI finance organizations aren’t always the ones investing the most in AI, or the ones that have used AI the longest. Instead, they invest in specific ways or specific capabilities and more readily experiment with the following actions:
Example AI use cases in finance:
By 2025, cloud-native platforms will serve as the foundation for more than 95% of new digital initiatives — up from less than 40% in 2021.
Investing in cloud is a key building block for autonomous finance given the ability for continuous innovation, automation and faster value realization. Cloud accelerates time to market with features and products that can scale and operate with less overhead. But despite the growth of cloud adoption in finance, it still significantly lags behind other functions.
Finance typically struggles to abandon existing technologies in favor of complete and immediate migration to the public cloud for two primary reasons: sunk costs (including unamortized costs still on the balance sheet) for on-premises systems and legacy system customizations, which slow the pace of migration to the cloud and often put the CFO behind the technology curve.
For organizations maintaining a combination of on-premises and cloud systems, building effective integration capabilities will be key in moving forward with cloud-migration plans and ultimately, an autonomous function.
As autonomous finance initiatives ramp up, it’s imperative to recruit the right digital skills across the finance team and throughout the business. But leaders face unprecedented talent challenges with competition for attracting and retaining employees. Plus, expensive talent is scarce — 47% of CFOs report it’s difficult to find and hire enterprise talent. A more digital finance function may require rethinking the way the finance function is staffed and how roles are structured between finance and the rest of the organization.
CFOs should partner with HR to define digital skills, bring them into the hiring process and rethink how to retain these skills. Among strategy, attraction, attrition and employee engagement, a digital talent strategy involves:
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An autonomous finance function uses technologies that move beyond traditional automation to include capabilities, such as self-learning and self-correction, and can make decisions based on the data they collect. These technologies have the potential to transform all parts of the finance function, from the back office to the office of the CFO. For example:
Back-office use cases include:
Middle-office use cases include:
Front-office use cases include:
Office of the CFO use cases include:
Autonomous finance yields augmented real-time insights, effortless compliance and greater flexibility in financial strategy. It goes beyond an automated function in its ability to learn and take action without human intervention.
Gartner has been studying standout corporate performers since the Great Recession (end-2007 to mid-2009) and has found that the decisions and actions companies take heading into a downturn clearly correlate to whether they exit successfully. Unique economic headwinds complicate today’s operating environment, but the differentiating decisions clearly hinge on digital. It’s imperative for organizations to place the right digital bets at the right cost heading into a recession. This includes:
Autonomous finance offers many opportunities to those bold and strategic enough to pursue and accelerate this initiative.
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©2022 Gartner, Inc. and/or its affiliates. All rights reserved.